8 Jun 2016

Rapid adjudication of payment disputes can literally save a construction contractor’s business.  But before you can adjudicate a pay dispute, one has to exist.

There are two common situations where despite appearances, no pay dispute exists.

First, the work scope may change as a result of directions or site instructions from the principal but the contract price will not necessarily change as a result.  If the contractor does not claim a price variation within the time and in the way that the contract prescribes, it may lose its right to be paid anything at all for the extra work.  In order to be adjudicated, a payment right has to be disputed; in order to be disputed, a payment right has to exist under the contract.  If there is no payment right under the contract because the contractor did not claim payment on time or properly, there will be nothing to adjudicate.

The other common situation where contractors seek adjudication of payment disputes that do not actually exist is where a principal/head contractor’s request for clarification of a payment claim, or more information about that payment claim, is treated as a refusal to pay.  Unless payment has been withheld for longer than 50 days (in Western Australia) or any shorter time prescribed in the contract, there can be no payment dispute without an expressed or implied refusal to pay.  If you apply for adjudication without an expressed or implied refusal to pay, your application will be rejected because there will be no payment dispute to adjudicate.

A principal/head contractor’s response to a payment claim can sometimes be read more than one way, so you should always take legal advice the moment you think there may be a rejection of your payment claim.  The other thing a good lawyer will consider is whether there are other present or future payment disputes that can be bundled up in the same adjudication to avoid the cost and delay of making multiple applications.

Often, there is a window of time when all or most of your payment disputes can be taken to adjudication at the same time – a “sweet spot” that represents the ideal time to adjudicate.  That “sweet spot” may literally just last a day or two, and can often be manipulated by asking the principal/head contractor the right questions at the right time.  But timing is everything so always take legal advice the moment you are having trouble, or expect that you might have trouble, getting paid for the work you do.

This is general information only, and does not constitute specific legal advice. If you would like further information in relation to this matter or other legal matters please contact our office on Freecall 1800 609 945 or email us now.

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